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1991 – Security Capital Industrial Trust

Bill Sanders founded Security Capital Industrial Trust to invest exclusively in industrial real estate. The company initially focused on distribution spaces in secondary markets, such as San Antonio and Denver.

During the early 1990s, prevailing wisdom indicated that real estate was—and always would be—a regional business, offering little room for a single company to create a national, let alone global, footprint. Bill Sanders disagreed.

As the founder of LaSalle Partners (now Jones Lang LaSalle), Sanders built one of the largest real estate companies in the world by focusing on the importance of customer service. By 1991, however, he was ready for a new challenge. Having retired as CEO of LaSalle, Sanders founded a new firm, Security Capital Group, in Santa Fe, N.M., intent on proving he could build a series of publicly traded real estate companies with national reach, each focusing on different real estate sectors.

Under the umbrella of Security Capital Group, Sanders formed Security Capital Industrial Trust (SCI), a Prologis legacy company, to invest exclusively in industrial real estate. The goal was to build long-standing relationships with distribution companies by moving them into existing buildings or developing new structures to meet their evolving needs.

As those companies expanded into new markets, SCI hoped to expand along with them, eventually operating coast-to-coast operations that served the largest users of industrial space in the nation.

Timing was critical. The recession that took hold in the early 1990s sent real estate prices plummeting, providing a unique opportunity to acquire distribution facilities at rock-bottom prices. Sanders quickly gathered a team of real estate consultants, including Tom Wattles, Bob Kritt and Robert Watson, who outlined a strategy for acquiring properties in the southwestern United States and raising capital from institutional investors.

Intent on taking SCI public once it could produce solid returns for its investors, Sanders needed to hire a corporate executive rather than a manager accustomed to handling a patchwork of small real estate businesses. He tapped Dane Brooksher, a managing partner for the Chicago office of KPMG, a professional services firm.

From the outset, SCI was innovative in its acquisitions. It targeted lower-priced, secondary distribution markets in places like Arizona, Denver and San Antonio, instead of primary markets like New York, Los Angeles and Chicago. The firm purchased 100,000- and 150,000-square-foot spaces and turned them into multitenant buildings, providing its customers with space equal to their needs.

Because the purchase prices of these facilities were so low, returns often outpaced those being earned in more expensive primary markets. Investors took notice, providing an infusion of capital for further expansion across the United States, which would lead to the company’s public offering just three years later, in 1994.

“There was a lot of doubt about whether or not we would be successful,” said Brooksher, retired CEO of Prologis. “It sounds simple, but it was a new concept. When I came to work, Bill said, ‘You all build this company. I’ll support you. While I’ll help you with the initial capital and guidance, it’s up to you guys to make it happen.’”

11/25/13 - Jim Jachetta

I joined SCI in 1995. For me it's been like being the Chief Engineer of a Starship. I never take it for granted.